Thursday, March 4, 2010

Pay, while not the most important motivational factor for most people, can be the most noticed and affecting factor simply because it can be measured. Companies need to have structure and policies when it comes to figuring out who will earn certain amounts of money and still create equitable feelings.

One interesting thing that I learned in that was just how off-balanced the pay to CEO and upper level business professionals is in relation to the lewest paid employeee in the firm. I believe the professor said it was a 400% difference! That means it takes 400 regular low paid workers' salaries to pay 1 CEO. I might not be very good with finances, but I cannot see anything fair about that. Sure the CEO might work harder, maybe, but I doubt they are working 400% harder.

Ben and Jerry's used to have a policy that the CEO could not earn more then 3 times the pay of their lowest paid employee. While this can be seen as a problem today, and is why they have gotten rid of that policy, it conveys to me a correct principle, that employees are the ones responcible for carrying out the work and getting things done, and should be compensated more in relation to how successful the firm is, and not so much on paying them the least amount they can, so the CEO can become overpaid with 400% more.